The Wages of Containment

Foreign Aid, American National Security Policy, and the Origins of the Developmental State

My dissertation argues that the United States played a critical role in the formation of the developmental state in order to defend its sphere of influence during the Cold War. The main case study in my dissertation is Taiwan, where the role of the United States was most prominent, and on the basis of my findings in the Taiwan case I reinterpret the theoretical significance of U.S. influence in Japan and South Korea. I argue that domestic politics and the legacy of Japanese imperialism were of secondary importance compared to American containment strategy in the creation of the developmental state. By implication, I conclude that American national security policy laid the foundations of the first wave of the East Asian economic miracle.

This finding raises additional questions about how to interpret the success of the United States in Northeast Asia in the context of the literature on foreign aid. The Cold War presents an extremely mixed picture for evaluating the effectiveness of U.S. economic aid programs. Why do we observe such dramatic variation? Why was the United States remarkably effective at promoting development in some cases but helpless at promoting development in others?

My dissertation provides an answer to this question. My thesis is that during the Cold War, the developmental effectiveness of U.S. economic aid was governed by two factors: the perceived geopolitical alignment of the recipient country and the perceived severity of the threat that the country faced from the United States' geopolitical adversary. When the U.S. provided economic aid to uncommitted or "neutralist" countries, aid was not effective at promoting development because the United States’ primary goal was to influence the recipient's foreign policy. In contrast, the United States had a greater national security interest in using aid to promote economic development among its allies and security partners. Economic development has clear consequences for national security: it enables a country to finance a heavier military burden, it leads to the formation of industries that have a direct application in defense, and it forestalls the likelihood of domestic instability. For all of these reasons, the United States had an interest in promoting development in countries it sought to defend, which in general were allies and security partners. Using the same logic, I also argue that the extent of the U.S. interest in promoting development was a direct function of the perceived severity of the threat against its allies and security partners. The developmental states of Northeast Asia were the extreme cases in this spectrum. In attempting to contain what it perceived to be a long-term threat that began with a period of emergency, the United States became an unlikely sponsor of state-led capitalism in order to achieve rapid industrialization within its sphere of influence.

My dissertation presents these findings using a mixed-methods approach that employs both statistical analysis of an original data set and historical methods based on original archival research. Although my regional focus is on East Asia, my dissertation examines a wide range of cases to present a comprehensive picture of American diplomacy during the Cold War. In addition to the developmental states of Japan, South Korea, and Taiwan, I examine U.S. relations with India, Egypt, the Philippines, and West Germany. In the case of West Germany, I study U.S. efforts to promote European reconstruction in the context of the geopolitical rivalry with the Soviet Union that manifested itself most vividly in the crises over West Berlin. In developing these historical case studies, I draw on a wide range of archival and microfilm collections and primary sources in Mandarin Chinese, Classical Chinese, and German.